Buying property by taking home loan is easy today. We have number of home loan options. Prior to taking home loan we check about an applicable rate of interest because EMI is decided based on this interest rate. But, we simply ignore other applicable charges while taking a home loan. Let’s take a look at 20 Hidden charges on Home Loan.
20 Hidden Charges on Home Loan you must know
Rate of Interest :- Before take a Home Loan, check the Rate of Interest as Fixt Rate or Fluctuate Rate. Alwyas take the loadn as Fixt Rate basis.
Processing Fee
A processing fee is nonrefundable charges applicable for processing a home loan. This charge varies from bank to bank. It is usually in the range of 1500 Rs to 2000 Rs or 0.5% to 1% of the home loan amount.
Administrative Fee
The administrative fee is hidden charges charged by banks separately. These charges are levied for processing your home loan application. Only few banks have removed this fee so you must check with the bank for the applicable administrative fee on the home loan.
Valuation or Inspection Fees
If you are planning to purchase high-value property, this charge may be applicable to you. Bank carryout valuation before sanctioning the loan fees applicable for this valuation is known a valuation or inspection fees. The majority of banks are not taking this fee, however, few public sector banks still charge this fee.
Legal Charges
Banks also incur some charges from the customer for legal and technical verification of the property. It is known as legal charges.
Notary Fees
If you are NRI and applying for a home loan then you need to get your KYC and Power of Attorney notarized by the Indian embassy. In such cases the bank will ask fees of the notary from you.
Franking fee on sale deed
In certain states like Maharashtra and Karnataka, you need to carry out franking on sale deed. This fee varies based on sale deed value it is usually 0.1-0.2% of the home loan.
Intimation or registration fee
You need to intimate subregisterar’s office about mortgage information. It is a newly started process and followed only in Maharashtra state. Fees charged for this is known as intimation fees.
Indemnity Cost
In case of certain banks, the borrower of property need to give assurance to the lender about various risks like a delay from builder end for receiving approval or the property tax on property is yet not paid by seller etc. This cost is known as Indemnity cost.
Fire Insurance or property Insurance Fee
Some banks make it mandatory to take fire or property insurance. You need to either take this insurance or you need to pay fee applicable for taking this insurance.
Cheque Bounce Charges
If you are unable to pay home loan EMI on time or if cheque given by you for EMI bounced bank will impose charges. This charge is known as cheque bounce charges.
Conversion Fees
Some banks like HDFC Ltd gives an option to the customer for reducing applicable home loan rate by switching to lower interest rate scheme. The fee charged towards this conversion is known as conversion fees.
Pre-Payment Charges
Pre-payment charges are not applicable with the floating rate interest home loan. However, for fixed rate interest home loan majority of bank impose pre-payment charges.
Document Retrieval Charges
Document retrieval charges are the charge imposed at the time of closing home loan. This charge is for transferring original documents to the borrower from the central repository. Suppose you have taken home loan from ICICI bank. ICICI bank stores all documents at central place say Mumbai, in case of closure of loan all this documents to be retrieved/courier to branch from where you are closing the loan. This charge is known as document retrieval charges.
MODT Charges
MODT means Memorandum for deposit of title deed. It is charge applicable to you as a home loan borrower for the undertaking given by you that you are depositing the title documents of the property with the bank and bank will return this document after loan closure. Some banks ask for registering this undertaking on the stamp.
Delayed Payment Charges
Suppose you have taken a home loan and you are unable to pay EMI on time due to various reason. Bank will impose a penalty for delay. It is known as delayed payment charges.
Switching loan charges
Suppose you want to switch your loan from floating to fix or to any other good home loan scheme of the bank. Bank will charge additional money this charge is known as switching loan charges.
Changing loan tenure
Certain banks will impose a fee for changing home loan tenure. This charge varies from bank to bank.
Statement of Account
Every year bank sends a statement of account for the home loan. If you misplace this statement of account and if you are in need to issuing new statement bank will ask for additional payment.
Duplicate Document Charges
You must keep Xerox copy of all original documents submitted by you to the bank. If you are in need to Xerox copy at a later stage you need to pay extra money to the bank. It is known as duplicate document charges.
List of Documents
You may be surprised to note that several bank also ask for money if you want to know the list of a document submitted by you to bank at home loan disbursement stage.
Conclusion -
When you take a home loan, you are not only paying EMI on the home loan. You are paying multiple other hidden charges which make your home loan costlier.
Make sure to check all applicable charges before taking home Loan.
Hope you find this post useful. Do post your query about the home loan in the comment section.
